Why Are Cryptocurrencies Typically Bad For The Environment
At first glance, digital currencies may not appear to pose much of a threat to the environment. But the real impact of dealing in cryptocurrencies is now emerging, and it paints a stark picture.
Digital assets such as Bitcoin have a considerable environmental footprint, due to the amount of energy required to power the algorithms behind them. While this could theoretically be done using renewable energy, in reality it usually isnt. China is a leading player in mining for Bitcoin, and 60% of the energy it uses to do so is powered by coal.
Think about the enormous scale of cryptocurrencies, and the growing demand for Bitcoin mining, and you can see the problem. Currently, blockchain-based currencies are using as much energy as many small countries, yet their popularity continues to grow. And as demand increases, so too will the energy requirements of this industry.
Understanding The Environmental Impact
It is important to note that there is a difference between electricity consumption and environmental/carbon footprint. There is no doubt that bitcoins miners require large amounts of electricity. But to understand the ecological impact, there needs to be information about where miners source their energy. Bitcoin itself does not inherently produce extra carbon emissions because any source of electricity can technically power the network. As of , researchers at the Cambridge Center of Alternative Finance found that 62% of global miners relied on hydropower, 38% used coal, and 39% used some combination of wind, solar or geothermal energy. But it is estimated that only 39% of bitcoins energy consumption is carbon neutral.
While other industries need specific environments and conditions, bitcoin can capitalize on energy sources that are inaccessible to others. In the Chinese provinces of Yunnan and Sichuan, large quantities of excess hydropower were harvested to power the growing mining factories in China. During the rainy season, these provinces could be responsible for 50% of all mining operations worldwide. But in June, the Chinese government imposed restrictions on cryptocurrency mining. That has resulted in mining operations migrating to countries like Kazakhstan, which rely more heavily on fossil fuel-based electricity.
The Bitcoin Mining Network Now Consumes More Electricity Than 159 Countries Of The World
This article was published in The Beam for more on the topic.
- 42.67 TWh: The annual energy consumption of Bitcoin and Ethereum combined
- 0.19%: The percentage of the worlds electricity used by Bitcoin and Ethereum
- 8.49: The number of U.S. households that could be powered for a full day with the same energy as single bitcoin transaction
Bitcoin well and truly pricked the mainstream consciousness in 2017. Thanks to an incredible 11-fold rise in value this year, everyone is suddenly talking about Bitcoin and cryptocurrencies. Its easy to see why the phenomenon has grabbed the worlds attention anything that goes from $1,000 in value to $11,000 in value inside 12 months is clearly big news. Its a meteoric trajectory, and one that has triggered talk of an impending bubble, the inevitability of regulation, and an uncertain future.
Some commentators believe that cryptocurrencies are the reserve of drug dealers and criminals, with no real utility to regular people. Others think that they signal a revolution and an opportunity to sidestep the old financial system and shift the power away from traditional banks. Regardless of which side of the fence you are standing on, there is an issue that needs addressed that affects everyone regardless of your opinion cryptocurrencies are consuming massive amounts of energy.
Even a single transaction uses a huge amount power
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The 15 Most Sustainable Cryptocurrencies For 2021
Leigh Matthews, BA Hons, H.Dip. NT
Leigh Matthews is a sustainability expert and long time Vegan. Her work on solar policy has been published in Canada’s National Observer.
Theres been a lot of attention on Bitcoins shocking environmental impact in recent months, and while efforts are being made to minimize the carbon footprint of the cryptocurrency, some investors are jumping ship in favor of greener options. With more than 4,500 mineable coins and tokens in existence, which, if any, are the most sustainable cryptocurrencies?
UPDATE: Following immense interest in this topic and great leads on other green cryptocurrencies, Ive added six new tokens/networks below. Any of the coins listed here would be a good choice for Tesla as the company searches for digital currency with a much smaller carbon footprint than Bitcoin. Keep the suggestions coming, ideally with solid leads/info on why a token deserves attention from investors who care about sustainability, and Ill do my best to take a look. Are you a Dogecoin fan? See why everyones favorite canine inspired cryptocurrency didnt make this list. here.
Blockchain Tech Is Moving Towards Eco
The good news is that the blockchain industry is getting more interested in creating a sustainable and eco-friendly cryptocurrencies with every year that passes. The sustainability and scalability features are becoming core criteria for existing and new crypto. We will surely see more sustainable cryptocurrencies in the future and part of large projects and even used as payment means for real-life goods.
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Bitcoin Uses Less Than Half The Energy The Banking System Consumes According To Recent Data
As new miners join the fray and the Bitcoin network continues to grow, so too does its energy usage.
Its easy to read the headlines and assume that bitcoin, and indeed every other cryptocurrency, must be significantly contributing to climate change. In May, Tesla CEO Elon Musk tweeted his concerns that cryptocurrency is a good idea on many levels … but this cannot come at great cost to the environment. Shortly after, bitcoins value tumbled 15%. The growing global pressure on bitcoin miners to use more renewable energy has led to the creation of initiatives like the Bitcoin Mining Council and pushed mindful investors to seek out greener cryptocurrencies.
As of mid-July, a single bitcoin transaction required 1719.51 kilowatt hours – where a kWh is the amount of energy a 1,000-watt appliance uses in over an hour. To put that in perspective, that is about 59 days worth of power consumed by an average U.S. household. On an average day, 240,000 bitcoin transactions are sent over the network.
Cryptos To Watch: Greener Alternatives To Bitcoin
Tesla said it is looking at other cryptocurrencies that use less energy than Bitcoin
Elon Musks tweets have been sending Bitcoin zooming to the moon or screeching downwards for some time now, but his admission about the cryptocurrencys environmental impact has sent different sorts of shockwaves around the market.
In short, mining Bitcoin uses more electricity each year than the whole of Argentina or the Netherlands , which has led many sustainability-focused investors to look for digital currencies that have a lower or even a minimal impact on the earths atmosphere.
Before we look at some of these greener cryptos, we need to look at why crypto mining is so energy-intensive.
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Why Is Taking Up So Much Energy Bad For The Environment
Fossil fuels account for more than 60% of the energy sources in the US. A majority of that percentage is natural gas and a minority is coal. The carbon dioxide produced by fossil fuels is released into the atmosphere, where it absorbs heat from the sun and causes the greenhouse effect.
As mining rigs consume more energy, nearby power plants must produce more electricity to compensate, which raises the likelihood that more fossil fuels will be used. States that have struggling coal power plants, such as Montana, New York and Kentucky, are trying to cash in by wooing crypto mining companies.
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A nearly zero-energy alternative to Bitcoin and other blockchain-based cryptocurrencies that promises as much security but far greater speeds is now under development in Europe, a new study finds.
Cryptocurrencies such as Bitcoin are digital currencies that use cryptography to protect and enable financial transactions between individuals, rendering third-party middlemen such as banks or credit card companies unnecessary. The explosion of interest in Bitcoin made it the world’s fastest-growing currency for years.
However, a major weakness of Bitcoin is the extraordinary amounts of energy it demands, and the vast amounts of the global warming gas carbon dioxide it spews out as a result. Bitcoin reportedly has a global electricity consumption approaching that of the entire nation of Austria, and a global carbon footprint comparable to that of Denmark.
In seeking out alternative approaches to cryptocurrency, computer scientists noted that the 2008 paper that first described Bitcoin explained the heart of the protocol lies in preventing double-spending. This potential flaw in any digital cash scheme would permit a digital token to get spent more than once.
The researchers say their consensusless algorithms are not only secure, but also consume negligible amounts of electricity, with transactions each requiring about as much as energy as exchanging emails.
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Elon Musk Wants Energy Efficient Cryptocurrency
Elon Musk indicates that Tesla will stop using Bitcoin for transactions. Tesla wants to use cryptocurrencies that are at least 100 times energy-efficient per transaction.
There is speculation that Tesla could enable solar-powered cryptocurrency mining, support other cryptocurrencies like Doge and could create their own cryptocurrency.
Digiconomist estimates that compared to 1100 kWh for each Bitcoin transaction, Nano uses just 0.112 Wh. Etherium uses about 85 kWh per transaction.
Cardano uses a Proof of Stake consensus mechanism where those participating in the currency buy tokens to join the network. Cardano claiming that the cryptocurrency network consumes only 6 GWh of power. Bitcoin consumes 115 TWh of power per year.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
The Difference Between Cryptocurrency And Blockchain
Terms like cryptocurrency and blockchain are often used interchangeably, but they actually have quite different meanings. Blockchain is the very technology that cryptocurrencies rely on. It forms the basis of some of the best-known digital currencies in the world, such as Bitcoin.
Bitcoin isnt the only currency that uses blockchain technology, of course. Many virtual assets rely on this digital ledger. Using cryptography, blockchain links a huge list of records, which have since become known as blocks. The information in each block can never be altered, because every block is linked through the data held within it. Its this incredibly robust level of security which has led to blockchain-based currencies becoming so popular.
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What Is A Cryptocurrency
The term cryptocurrency was relatively unheard of 10 years ago, but its since become widely recognised. It refers to forms of digital or virtual currencies which are based in the art of cryptography, using highly complex encryption algorithms. They are designed to be incredibly secure, with virtually no chance of counterfeiting, these digital assets are resistant to inflation and easily portable.
Bitcoin is perhaps the most famous form of cryptocurrency. The first decentralized cryptocurrency, Bitcoin was launched in 2009. The developer behind it is known as Satoshi Nakamoto, but this is a pseudonym. In fact, the real identity of its creator remains somewhat of a mystery, with several high profile scientists and engineers claiming that they were behind the world-famous digital currency.
Coal To Fuel The Bitcoin Miners
Chinas share of mining factories accounted for more than 50% of bitcoin mining power, until the authorities banned mining there a few months ago. Some of that mining has moved to North America. The electricity used comes from a variety of sources, but a significant portion has coal as its source. The Digiconomist website calculates a carbon footprint of 77 megatons of CO2. As the price of the bitcoin has increased fivefold in the past year, we should expect this already staggering energy consumption to increase by a factor of five in the next two years.
However, this energy consumption is not inevitable, even for computing devices that work by blockchain. There are several methods that can be used in place of PoW. It has been shown that they provide equally safe protocols with lower electrical consumption than does PoW. The savings from some methods would be 99.95%, which would bring blockchain power consumption down to a perfectly acceptable level.
The situation is therefore absurd. Competition among miners has set in motion an infernal machine that seems unstoppable and that, in the case of bitcoin, we arent even trying to stop. Unfortunately, its feared that the consequences of Nakamotos blunder in having chosen the PoW method will get worse. Two possibilities could reverse the trend: a collapse in the bitcoin market, or intervention by the authorities that have the power to do so.
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Popular Cryptocurrencies: Which Is The Most Environmentally Friendly
The past decade has seen cryptocurrencies rise from relatively unknown fringe currencies to headline-hitting digital assets capable of shaking up the financial industry. These currencies have recently become one of the most valuable assets on the planet, and experts predict that coming years could continue to see their usage surge. But while this is great news for investors, the rise of cryptocurrency isnt completely without its downsides.
One of the key problems of cryptocurrencies lies in the environmental impact that digital transactions have. The process of mining for bitcoin is particularly energy-intensive, due to the complex mathematical calculations that must be completed to create each and every new bitcoin. Consider this on a global scale, and you might be surprised to hear that the amount of power needed to deal in cryptocurrencies is similar to that of a small country.
With concern over the environmental impact of cryptocurrencies growing, increasing numbers of investors are looking for new ways to enjoy the benefits of digital currencies in more eco-friendly ways. Of course, no two cryptocurrencies are the same and this extends to the environmental impact of the currencies too.
Here we have looked at the most environmentally-friendly cryptocurrencies available today, focusing on what experts are doing to limit the ecological damage that they might cause.
Cryptocurrency With Potential To Go Green: Ethereum
Among cryptocurrency assets to buy for those concerned about the environment, Ethereum arguably makes the most compelling case. With its present proof-of-work architecture, ETH tokens consume a considerable amount of energy. According to the article, Energy Consumption of Cryptocurrencies Beyond Bitcoin, which has been republished by the U.S. National Library of Medicine, Ethereum has a rate network power of 719.1 kilowatts.
While thats only 17% of the rate power of Bitcoin, its easily the top power consuming alternative cryptocurrency . However, the development team behind Ethereum are steadily working to transition its architecture to proof-of-stake. Indeed, theres significant progress being made in this department, which could see ETH consuming far less energy than before.
By far less, Im talking about a 100-fold reduction in energy per transaction. Granted, the cryptocurrency is not quite there yet. But Rome wasnt built in a day. Furthermore, Ethereum is incredibly viable, ranking as the second-most valuable virtual currency, with a present market capitalization of nearly $279 billion.
Look, you can be all about the environment but even go-green folks want a different type of green. Therefore, I consider ETH to be the most promising cryptocurrency if it can clean up its act.
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Why Crypto Mining Needs So Much Power
Most people don’t understand why crypto mining would need so much power. They believe anything already available electronically should be power minimal. Crypto mining, however, is so power-intensive. It involves the “proof of work” system in extraction and verification. Several miners work at the same time to verify transactions.
Mining is such that several people are looking to solve the same puzzle. The one who solves it gains the rewards. There is no limit to the miners allowed at a time. It means several miners work at the same time from anywhere in the world.
They all provide different data at the same time as it involves guesswork. The processing needs a lot of computing power. The higher computing power, the more energy consumption.
A single Bitcoin puzzle takes around 10 minutes to solve. Every time a miner joins the platform, it becomes harder to solve the puzzle. The lucrative nature of Bitcoin means miners always want to join.
Bitcoin has been reducing miners through halving. It is where it reduces the amount of reward for the puzzle solved. The method is a way of preserving the coin’s quality. Fewer miners lead to lesser coins available in supply. Bitcoin works with the laws of demand and supply hence an increase in value.
It seems like halving also helps in managing energy consumption.
The whole debacle leads to the question of sustainability.
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